Patel v. State Farm Lloyds

Filing 31

Memorandum Opinion and Order denying 23 Motion for Leave to File Amended Complaint. (Ordered by Judge Brantley Starr on 8/28/2024) (ykp)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
NITA PATEL,

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Plaintiff,
v.
STATE FARM LLOYDS,
Defendant.

Civil Action No. 3:24-CV-0428-X

MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff Nita Patel’s motion for leave to amend. (Doc. 23).
Having considered the parties’ arguments, the underlying facts, and the applicable
caselaw, the Court DENIES the motion for leave to amend. (Doc. 23).
I. Background
This is an insurance coverage case. Nita Patel owns a Texas commercial
insurance policy issued by Defendant State Farm that provides coverage for her
business property. Patel alleges that on July 6, 2023, her business property sustained
water damage, including damage to the walls, flooring, and destroying valuable
pieces of fine art. Patel alleges that before the water damage incident occurred, she
brought up concerns regarding her policy coverage with her State Farm Insurance
agent, Dale E. Johnson (“Johnson”). In early 2024, Patel filed suit against State Farm
in state court, and State Farm removed the case to this Court. Around three months
later, Patel filed the present motion seeking to join Johnson as a defendant. The
motion is ripe for this Court’s consideration.
1

II. Legal Standard
Typically, Rule 15 of the Federal Rules of Civil Procedure “control when a
plaintiff seeks to . . . amend their pleadings.” 1 Rule 15(a) requires a trial court “to
grant leave to amend freely, and the language of this rule evinces a bias in favor of
granting leave to amend.” 2 And, a district court must possess a “substantial reason”
to deny a request for leave to amend. 3 However, motions for leave to amend are not
always governed by Rule 15; if amending the complaint would destroy the court’s
jurisdictional basis, such request “necessarily implicates considerations and analyses
beyond a typical Rule 15 motion.” 4 “A motion for leave to amend to add a nondiverse
party whose inclusion would destroy diversity and divest the court of jurisdiction is
governed by 28 U.S.C. § 1447(e), not Rule 15(a).” 5
28 U.S.C. § 1447(e) states that “[i]f after removal the plaintiff seeks to join
additional defendants whose joinder would destroy subject matter jurisdiction, the
court may deny joinder, or permit joinder and remand the action to the State court.” 6
District courts “must scrutinize such amendment more closely than an ordinary

Smith v. Walmart Inc., No. 4:21-CV-1298-P, 2021 WL 5630918, at *1 (N.D. Tex. Dec. 1, 2021)
(Pittman, J.).
1

2

Smith v. EMC Corp., 393 F.3d 590, 595 (5th Cir. 2004) (cleaned up).

3

Id.

4

Smith, 2021 WL 5630918, at *1.

5

Gallegos v. Safeco Ins. Co. of Ind., No. H–09–2777, 2009 WL 4730570, at *2 (S.D. Tex. Dec.

7, 2009).
6

28 U.S.C. § 1447(e).

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amendment . . . and should use its discretion in deciding whether to allow that party
to be added.” 7
III. Analysis
The Court concludes that leave to amend is improper here. 28 U.S.C. § 1447(e)8
requires examining four factors as first established by the Fifth Circuit in Hensgens
v. Deere & Co. 9
In Hensgens, the Fifth Circuit outlined four factors that courts should consider
when determining whether to permit post-removal joinder of a non-diverse
defendant:
(1) the extent to which the purpose of the joinder is to defeat federal
jurisdiction; (2) whether plaintiff has been dilatory in seeking joinder;
(3) whether plaintiff would be significantly injured if joinder is not
allowed; and (4) any other factors bearing on the equities. 10
The Court discusses the four factors in turn.
A. Defeating Jurisdiction
The first factor—whether the purpose of joinder is to defeat federal
jurisdiction—turns on three considerations: “[i] the viability of the claims alleged

Diaz v. Quantem Aviation Servs., LLC, No. 3:23-CV-1975-B, 2024 WL 1607066, at *1 (N.D.
Tex. Apr. 11, 2024) (Boyle, J.).
7

8 28 U.S.C. § 1447(e) provides that: “If after removal the plaintiff seeks to join additional
defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or
permit joinder and remand the action to the State court.”

See Hensgens v. Deere & Co., 833 F.2d 1179 (5th Cir. 1987); see, e.g., Rosa v. Aqualine Res.,
Inc., No. CIV.A.3:04-CV-0915-B, 2004 WL 2479900, at *1 (N.D. Tex. Oct. 28, 2004) (Boyle, J.)
(“Although section 1447(e) does not delineate standards by which a district court’s discretion should
be guided, the Fifth Circuit's decision in Hensgens, decided before section 1447(e)’s adoption,
enumerates several factors that should be considered when engaging in post-removal joinder
determinations.”).
9

10

Hensgens, 833 F.2d at 1182.

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against a new defendant, [ii] the timing of a plaintiff’s attempt to add the defendant,
and [iii] whether the plaintiff knew or should have known the identity of the new
defendant prior to removal.” 11
The first consideration—the viability of claims alleged the new defendant—is
generally analyzed similarly to claims subject to a Rule 12(b)(6) pleading standard. 12
If new claims introduced by the plaintiff against the non-diverse defendant are
nonviable, the first factor automatically weighs in favor of the defendant. 13

Here,

Patel does not provide arguments that its claims against the non-diverse defendant
are “viable” or that they are plausibly plead. Nor does Patel provide any other
support refuting that the “purpose of the proposed amendment [was] to defeat federal
jurisdiction.” 14 Patel’s proposed amended complaint fails to allege any actionable
misrepresentation by Johnson.
The

second

consideration

under

this

factor—the

timing

of

Patel’s

amendment—has some slight overlap with the next factor analyzing a plaintiff’s
dilatoriness. “[I]f the plaintiff knew of the nondiverse defendant from the outset and
chose to exclude him from the original pleading, the [C]ourt views this fact with much
suspicion.” 15 But, on the other hand, if the plaintiff “did not know the nondiverse

11 Appliance All., LLC v. Sears Home Appliance Showrooms, LLC, No. 3:15-cv-01707-M, 2015
WL 9319179, at *5 (N.D. Tex. Dec. 23, 2015) (Lynn, J.).

See Andrews Restoration, Inc. v. Nat’l Freight, Inc., No. 3:15-CV-1336-M, 2015 WL 4629681,
at *3 (N.D. Tex. Aug. 4, 2015) (Lynn, J.).
12

13 See id. at *2 (“[I]f the claims alleged against the nondiverse defendant are not viable, this
factor clearly weighs in favor of denying joinder.”).
14

See generally Doc 25 at 2–3.

15

Andrews Restoration, Inc., 2015 WL 4629681, at *4.

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defendant’s identity at the time the complaint was filed it is less likely that the
plaintiff is joining the nondiverse defendant to destroy diversity.” 16
Here, Patel has known of the identity of the diversity-killing defendant long
before her filing for leave to amend, dating at least all the way back to when she filed
her original complaint. 17 The Court’s suspicion is indeed raised at the outset for this
factor. And while the circumstantial timing of Patel’s request for leave to amend (i.e.,
that Plaintiff moved to amend three months after removal) does not sufficiently
persuade the Court, all three considerations, when lumped together, help tip the
scales for State Farm. The Court finds the first factor weighs in favor of State Farm.
B. Dilatoriness
The second factor examines whether the plaintiff delayed, and if so, for how
long. “There is not an exact timeframe to determine when a proposed amendment is
considered dilatory.” 18 But the Court may consider whether (1) significant activity
has transpired since the pleading stage, and (2) the plaintiff knew or should have
known of the proposed defendant’s identity and involvement. 19
Generally, if a plaintiff amends their complaint “before any trial or pre-trial
dates were scheduled and no significant activity beyond the pleading stage has
occurred,” a plaintiff has not been dilatory. 20 Here, not much activity has occurred in
16

Id.

17

See Doc. 1-3.

18 Ascent Emergency Med. Ctr. LLC v. Zelis Claims Integrity, LLC, No. 3:23-CV-2523-D, 2024
WL 2097708, at *3 (N.D. Tex. May 8, 2024) (Fitzwater, J.).
19

See id.

20 Est. of Brandon Alex through Coker v. T-Mobile US, Inc., No. 3:17-CV-2622-M, 2018 WL
993784, at *2 (N.D. Tex. Feb. 21, 2018) (Lynn, J.).

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this case since the pleading stage, but whether “the plaintiff knew or should have
known of the proposed defendant’s identity and involvement” does tilt the scales in
State Farm’s favor.

An amendment is still dilatory if the plaintiff “had ample

information about [proposed defendant’s] identity and involvement in [the underlying
controversy] before [plaintiff] filed the suit in state court.” 21
Here, around three months passed between when Patel filed the original
complaint and when she moved for leave to amend. And Patel knew of the diverse
defendant at the time she filed her original complaint, which mentions Johnson
repeatedly. 22 Patel offers no explanation as to why she did not sue Johnson in that
complaint or waited three months to join additional parties. As a result, the Court
finds that Patel was dilatory. This factor weighs strongly in favor of the Defendant.
C. Significant Injury
The third factor—whether Plaintiff will be significantly injured—turns on
considering the “‘cost, judicial efficiency, and possible inconsistency of results that
might result if a plaintiff is forced to try two related claims in different courts.” 23
However, “mere potential for parallel litigation . . . is not grounds for granting the
amendment; the party must show that it will be significantly injured if the court
denies joinder.” 24

21

Id.

22

Doc. 1-3 at 11–12.

Andrews Restoration, Inc., 2015 WL 4629681, at *6; see also Bonilla v. America’s Servicing
Co., Civil Action No. H–11–1974, 2011 WL 3882280, at *4 (S.D. Tex. Sept. 2, 2011).
23

24

Andrews Restoration, Inc., 2015 WL 4629681, at *6.

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Here, Patel can pursue the non-diverse Defendant, Johnson, in state court to
“prosecute the losses suffered as a result of State Farm and its agent’s own
misconduct.” 25 And State Farm “is a national . . . company seemingly capable of
satisfying the entire judgment without contribution from [the non-diverse
defendant].” 26 As such, this factor weighs against allowing Patel’s amendment.
D. Other Factors
The fourth factor— any other equitable factors—warrants no in-depth
consideration.

This factor’s purpose is to address any “unique circumstances

presented.” 27 Not every consideration is a “unique circumstance.” 28 If there are no
unique circumstances, this factor is neutral. 29
Patel does sufficiently prove—or even argue—that any unique circumstances
exist in this case. As such, the Court agrees with State Farm that there are no unique
circumstances that tip this factor in Patel’s favor, and this factor is neutral.
The first three of the factors weigh in favor of State Farm and the fourth is
neutral. Patel’s leave for amend should be denied.

25

Doc. 25 at 2.

26 Andrews Restoration, Inc, 2015 WL 4629681, at *7; see Martinez v. Holzknecht, 701 F. Supp.
2d 886, 892 (S.D. Tex. 2010).
27

Bonilla, 2011 WL 3882280, at *5.

28 See, e.g., Andrews Restoration, Inc., 2015 WL 4629681, at *7 (providing as an example that
the argument “to have all potentially liable parties in one proceeding” does not constitute for plaintiff
a “significant equitable interest[]” under this factor).

Skinner Capital LLC v. Arbor E&T, LLC, No. 3:23-CV-2320-D, 2024 WL 1219235, at *4
(N.D. Tex. Mar. 21, 2024) (Fitzwater, J.).
29

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IV. Conclusion
For the reasons stated above, the Court DENIES Patel’s motion for leave to
amend. (Doc. 23).
IT IS SO ORDERED this 28th day of August, 2024.

BRANTLEY STARR
UNITED STATES DISTRICT JUDGE

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